CLA-2-21:OT:RR:NC:N2:228
Ms. Misty G. Gibbins
Pacific Customs Brokers Inc.
1400 A Street
Blaine, WA 98230
RE: The tariff classification and eligibility of the United States-Mexico-Canada Agreement (USMCA) of Christmas Chips from Canada
Dear Ms. Gibbins:
In your letter received by this office on October 13, 2021, you requested a binding ruling on the tariff classification and United States-Mexico-Canada Agreement (USMCA) eligibility of the product, “Christmas Chips.” An ingredients breakdown, and sample of the product accompanied your inquiry. The sample was examined and discarded.
The subject merchandise, “Christmas Chips,” is said to contain cane sugar (Product of Brazil, Costa Rica, El Salvador, Guatemala, Mexico, or Peru and Refined in Canada), palm kernel oil with tristearate (Product of Malaysia, Indonesia, or Philippines), whey powder (Product of Canada), whey concentrate (Product of USA), soy lecithin (Product of USA), natural flavor (Product of USA) and artificial color (Product of USA). The sample provided depicts small chunks of red, green, and white teardrop-shaped chips with a flat circular base. The Christmas Chips will be imported in 12-kilogram containers and will be sold in bulk, used as baking inclusions in trail mixes or as toppings by bakeries, food manufactures and co-packers. When used for baking inclusions, the product will not be melted or reduced in size, rather it will be incorporated in cookies, muffins, and other baked goods.
You state that all ingredients for the Christmas Chips will be shipped to Canada where they will be processed into the finished product. The manufacturing process includes the following: mixing the ingredients, transferring the mixture to a pre-refining machine that reduces the interim product into smaller particles, transporting to a conche which promotes flavor development and ensures the ingredients are evenly distributed, conveying to a depositing machine to verify accurate sizes and shapes, placing inside cooling tunnels, and packaging in polyethylene bags which are packed inside corrugated boxes for export.
Classification:
In your letter, you suggested that the product may be classified under subheadings 2106.90.7800 or 2106.90.8000, Harmonized Tariff Schedule of the United States (HTSUS), the sugar quota provisions which provides for food preparations not elsewhere specified or included . . . other . . . other . . . other . . . containing over 10 percent by weight of milk solids . . . other . . . articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17 . . . described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions. We disagree. Based on the composition of the ingredients and use, the product will be classified elsewhere.
The applicable subheading for the product, “Christmas Chips,” will be 2106.90.8200, HTSUS, which provides for food preparations not elsewhere specified or included … other … other … containing over 10 percent by weight of milk solids … other … other. The general rate of duty will be 6.4 percent ad valorem.
USMCA:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
Since the product, “Christmas Chips,” contains non-originating ingredients, they are not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor is the product produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii).
As previously noted, the product is classified under subheading 2106.90.8200, HTSUS. The applicable rule of origin for goods classified under subheading 2106.90.8200, HTSUS, is in GN 11(o)/21.13, HTSUS, which provides
“[a] change to tariff items 2106.90.03, 2106.90.06, 2106.90.09, 2106.90.22, 2106.90.24, 2106.90.26, 2106.90.28, 2106.90.62, 2106.90.64, 2106.90.66, 2106.90.68, 2106.90.72, 2106.90.74, 2106.90.76, 2106.90.78, 2106.90.80 or 2106.90.82 from any other chapter, except from chapter 4 or tariff items 1901.90.32, 1901.90.33, 1901.90.34, 1901.90.36, 1901.90.38, 1901.90.42 or 1901.90.43.”
In this case, the Christmas Chips contain the following non-originating ingredients that need to undergo the tariff shift: cane sugar from Brazil, Costa Rica, El Salvador, Guatemala and Peru, and palm kernel oil with tristearate from Malaysia, Indonesia, or the Philippines. Since the non-originating ingredients in the Christmas Chips are all classified in a Chapter other than Chapter 4, HTSUS, or tariff items 1901.90.32, 1901.90.33, 1901.90.34, 1901.90.36, 1901.90.38, 1901.90.42 or 1901.90.43, HTSUS, the tariff shift rule is met. Therefore, the product, “Christmas Chips,” is an eligible good for preferential tariff treatment under the USMCA.
Accordingly, the product, “Christmas Chips,” classified under subheading 2106.90.8200, HTSUS, is an originating good pursuant to GN 11(o).
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Timothy Petrulonis at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division